Update: On Margins & Availability of Additional Cash for Withdrawals on Dhan

1

Hello Traders and Investors,

We continue to build Dhan and improve our Customer Experience based on a lot of feedback that we get from our users. We understand that for traders - improved Margins and availability of Cash in Hand are two of the most important aspects to ensure they are capital efficient - while they are trading and also when they are not trading.

In order to enhance our customer experience, we’ve further updated our Risk Policy regarding blocking of margin and making additional cash available for withdrawal from Dhan. As you’re aware, for any position taken in the securities market, a minimum of 50% of the margin funds must be fulfilled from Cash (Ledger Balance) or Cash Equivalent Securities (such as Liquid ETFs, G-Sec, SGB, etc.), with a maximum of 50% from Non-Cash Securities (such as certain ETFs, Equity Shares, etc.).

Here’s an overview:

Cash component of Margin: Cash (Ledger Balance) + Valuation of Cash Equivalent Securities

Non-Cash component of Margin: Valuation of Non-Cash Equivalent Securities

Initially while blocking the margin, we used to block the Cash component (without prioritising Valuation of Cash Equivalent Securities over Ledger Balance). Now, when blocking the cash margin, we prioritise blocking the Cash Equivalent Securities over your Ledger balance, allowing you the flexibility to withdraw the clear ledger balance via payout.

Example Cases:

Assume that you have Rs. 1,00,000 as clear ledger balance on a given day and you take a position which has a margin requirement of Rs. 3,60,000. Now as per the exchange mechanism at least Rs. 1,80,000 must be from Cash and Cash Equivalent securities while at max Rs. 1,80,000 can be from Non-Cash Equivalent Securities. Below are the cases highlighted with different values of collateral values that affect the payout.

image
image952×506 16.1 KB

Note that same day pay-in of funds and CNC Sell Benefit will be considered as Non-Cash collateral for Trading limit for T day and shall NOT be considered for payout as in both these cases we as a Stock Broker are yet to receive funds in our accounts.

We hope these changes in our policy to block margins and make additional cash available for withdrawals will benefit you as a trader and in managing your capital more effectively and efficiently.

While on the topic of managing money and margins, don’t miss on these incredible features that Dhan provides to you as a trader:

We as usual are always open to your feedback and suggestions.

Thank you
Kuldeep Mathur

9 Likes
2

Hi @Castelinojason @t7support We have implemented the feedback you have suggested to us. Do give this a spin, thanks for this.

1 Like
3

Thanks @PravinJ @kuldeep. Welcome move by Dhan. Am sure me and fellow traders are going to much appreciate this update from Dhan.

1 Like
4

@PravinJ @iamshrimohan @kuldeep
Great update. good to see team dhan acting on traders request. not to jinx it , but overall system has also become really stable in last few months. :slightly_smiling_face:

One more change i was expecting with this update. please introduce separate “CASH COLLATERAL” tab in funds section. i see many post requesting this feature in forum.

3 Likes
5

@Vikas.Y Thanks! We are building this as well, will be rolled out soon.

3 Likes
6

@kuldeep This is fantastic.

Two follow up queries

  1. Will non-cash component be also given preference over ledger cash ?
  2. The 50% margin for Options buying - Does it have to be cash component only, or non-cash also works for it ?
7

@Lumiaman88 I’ll answer them

  1. Yes, as the rule states, upto 50-% could be from Non-Cash, so first that is blocked and then Cash Equivalent and then Ledger.
  2. It could be any of the cash or non-Cash but do note that the premium is actually paid to the exchange (to the seller indirectly) and hence your ledger will go in debit and thus DPC would be levied.
8

@iamshrimohan Thanks.

Point 2 - So do you imply that any margin used for Options buying will compulsorily have a DPC for it ? If someone buys a December 2024 expiry option now - they would Pay DPC on the margin amount utilized for the whole year ?
If the above is true - then the difference is that other brokers don’t allow to buy Options if Cash is not there, Dhan will alow to buy option but charge DPC on the margin amount utilized - is this thesis correct ?

9

@Lumiaman88 Yes, for option buying, see margin as eligibility to participate in the trade. However, its actual settlement has to be done by CASH which is credited to the seller (on T+1 day) and thus has to be taken from the buyer (from the client if not then broker). Hence, if sufficient ledger balance is not present, DPC would be applicable.

1 Like
10

@iamshrimohan Cool, thank you very much.

11

@iamshrimohan Even while trying to buy Equities for delivery, I am able to use the cash equivalent margin, and the next day my balance opens in red.
Is this of concern, am I paying interest here?

Screenshot 2024-01-11 at 10.52.55 PM
Screenshot 2024-01-11 at 10.52.55 PM1396×352 23.5 KB

12

@Lelouche Yes, you will pay interest here. According to exchange rules, you are allowed to carry this position till T+5 days (interest charged for each day at 0.044%) , after which if the debit amount is not cleared, these Cash Delivery positions will be sold off on T+6th day

13

@Lelouche correctly said by @Lumiaman88. Adding to that, consider margin as eligibility to participate in the trade. However, at the time of actual settlement, transaction is completed by CASH which is credited to the seller (on T+1 day) and thus has to be taken from the buyer (from the client if not then broker). Hence, if sufficient ledger balance is not present, DPC would be applicable.

14

Thanks for clearing it. Can we have a feature in Dhan which warns me on the same day, if I am using collateral margin instead of cash, while place the trade or maybe after 5 pm so I can add cash to my account? I do not want to take such trades for delivery using collateral margin. I have that only for FnO.

In other brokers like Zerodha, we are not able to use collateral margin to take delivery.

Also, the negative balance only gets updated the next day, so I don’t have any way of knowing of margin shortfall.

2 Likes
15

@Lelouche Taken this as feedback, will explore if that is possible to build. As the billing happens at EOD, I am quite skeptical if that could be done

16

@Lelouche A temporary way is to check the opening balance showing, and see if the cash position you are taking is lower than that or not. If taking a bigger position, it will very likely result in Debit balance next day

17

@iamshrimohan
Please provide some timeline. i am holding my diversification in cash component due to this, as manually calculating total cash component margin feels like one extra unnecessary activity which can be avoided.

18

@iamshrimohan please update …how long will it take for separate cash collateral margin section.

19

@Vikas.Y This is already in place, rest assured will bring this!